Mercosur trade deal will hurt EU farmers -union

A trade deal proposed by European Union leaders with South America's Mercosur bloc will boost Europe's exports of goods and services but will squeeze many of its farmers out of business, a major Spanish farm union said last week.

The EU is expected to revive trade talks with Argentina, Brazil, Paraguay and Uruguay at a summit this week in Madrid with Latin America. The talks were suspended in 2004.

<--Mercosur main office in Montevideo, Uruguay.

A report by Spain's COAG union estimated farm produce already accounted for 50% of Mercosur exports to the European Union and that this would rise further if trade barriers are lowered.

COAG said EU farmers could not compete with South American labour costs and also had to comply with stringent EU animal health and environmental regulations.

Citing unnamed EU sources, the report said European producers would consequently lose €3 to 5 billion a year due to increased imports of sugar, meat, fruit and horticulture from Mercosur, it added.

Family farming in danger

"Increased competition in these products will doubtless have a catastrophic impact on our model of production, which is basically family farming," COAG Secretary General Miguel Lopez said.

"When these products become scarce, then we will find out what they are really worth," he added. "This is not in the interest of consumers."

Cheaper grain imports

COAG said European livestock farmers would be able to import cheaper grain from Mercosur, which provides 66% of the protein-rich soybeans used to make animal feed in the EU, but would not be able to compete with South American meat.

"A decline in EU meat production would thus reduce the demand for cereal production and reduce internal prices," the report said.

The union's concerns echoed those of farm ministers from France, Italy and Ireland, who said in Brussels that they were opposed to an EU-Mercosur deal.